The Relentless Gravity of the Market Dimension - Exploring the Meaning and the Positioningof Political Parties towards Market Liberalism

Leonce Röth1

- Draft, please cite as much as possible!2 Comments are warmly welcome -

Abstract: Contemporary research indicates an emerging consensus: In democracies voters andparties still systematically structure political issues into higher aggregated conflict dimensions. Theeconomic dimension seems to evolve everywhere very quickly after the consolidation ofdemocracy. The very nature of this dimension remains contested and researches confrontthemselves with problems of equivalence – the spatial and temporal comparability of meaning.Thereby they knock at the door of discourse analysis and constructivist approaches. I endorse thisdevelopment and argue that only good evidence for equivalence renders comparisons meaningful. Ipursue such an endeavour in the first part of the article referring to the denotational consolidationand development of the market dimension over time and space. Using latent variable models, Icompare the relation of different policy issues to an overall market dimension. The results indicate,that the market dimension not only changes its relation to different issues but also bear an intensegravity – absorbing issues from minor conflict dimensions over time. Furthermore, the issuesstructure loose ambiguity since the mid-1960s. A sufficient proof of equivalence is the base forcalculating party positions towards the market from 1945 to 2012. These positions are grounded indeductive concept formation and improve the temporal and spatial comparability of party positionsbetween market liberalism and state interventionism.

Keywords: Market Liberalism . CMP . Political Parties . Cleavage . Partisan Hypothesis . Economic Dimension . Expert Surveys

1. Contemplating Market Liberalism from a Constructivist and Positivist Perspective3

Post modernists are usually inclined to find characteristic terms for historical periods. Borrowingthe wording of Michel Foucault, modern societies are defined by the translation of the market froma quotidian experience of daily life into the “matrix of society” (2008, p. 12). George Soros holdsthe hegemonic discourse of market liberalism responsible for the collapse of the world financialsystem (2008) and others see the controversy over the application of market mechanisms to be “themost crucial terrain of ideological struggle in our time” (Jameson, 1991, p. 263). Obviously, themarket seems to be a powerful concept, which strongly influences the organization of modernsocieties (Carrier, 1997).

That many post modernists assign a certain conceptual stability to the meaning of marketsbears a certain irony. The constructivist epistemology highlights the subjective interpretation or

1 Leonce Röth | University of Cologne | email: leonce.roeth@uni-koeln.de2 Quotations of Swedish parliamentarians are not yet approved to be published. Therefore, I quote them stillanonymously.3 I am indebted to various helpful reviews, comments, and advices. Major contributors of these useful interventionswere: André Kaiser, Simon Franzmann, Christina Zuber and Julian Garritzmann. Additionally, I am thankful to JonasTallberg which provided me with an oustandig setup at the University of Stockholm, were Interviews were conductedand major parts of the paper written.

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construction of reality and refers to the fluidity of meaning to fixed terminological entities (Berger& Luckmann 1966) – or in a more technical language; to the context sensitivity of meaning.Consequently, the great virtue of the constructivist approach is the study of the denotationaltransformation of concepts. We could make the market subject to such an endeavour and I will lieout in the next chapter that the market passed through major transformations of meaning. Thistransformation results in a concept with great potential of political controversy, because the marketas a means of social coordination became the symbol of what Georg Simmel called the timelessbalance between individual freedom and collective responsibility (2008 [1900], 509–529).Unsurprisingly, the market as a coordination principle was a core dimension of political conflictfrom the 19th century on – and may be remained the most salient representational strain betweenvoters and parties in modern democracies (Huber & Inglehart 1995; Mair 1997).

Of course, the way political parties take up the ideological positions between marketliberalism and the tight control of economic behaviour varies. The political struggle over theapplication of market mechanisms of Winston Churchill and Clemens Atlee in the 1940's or thedebates of Tony Blair and John Major in the 1990's entail different communication strategies,varying moral justifications and were embedded in different political contexts. I will focus on thevarying meaning of market liberalism in the first part of this article. But to allow for a widevariance of meaning and to take a high degree of context sensitivity into account comes with aprice. Researchers have to decide to go either for the movement or the location of things – to stressthe terminology of Heisenberg (1927). The first allows the focus on the varying meaning ofterminologically fixed entities, which describes the context sensitive approach4 to concepts. Thesecond focuses on invariant substance, inherent to a concept abstracting from terminologicalvariations, which describes the deductive approach to epistemology. Unfortunately, we cannot haveboth at the same time.

The epistemological choice then determines the criteria for validity (Healy & Perry 2000)and the criteria for validity in context sensitive and deductive approaches are not the same (Lincoln& Guba and Lincoln 1994; Chia 1997; Neuman 1997). I will demonstrate with the concept ofmarket liberalism that the main anchor to validity in context sensitive approaches is the spatial andtemporal transferability of meaning. We will see, that the market dimension travels throughdenotational transformations and that political issues are systematically linked to rather marketliberal or interventionist policy stances to different degrees in different times. Additionally, moreand more issues signal a clear position to the market – which might be interpreted as theconsolidation of the market dimension, the a major political conflict dimension with a relentlessgravity.

In the second part I pursue a positivist approach and ground market liberalism in anessentialist conception with criteria known from classical concept formation (Sartori 2009[1984];Gerring 1999). I measure the degree of market liberalism of political parties as a latent conceptreflected in certain indicators of party manifestos and building on the evidence from the first partusing only indicators which are systematically linked to market liberalism over time and space.Whereas context sensitive concepts should not be interpreted as positions, essentialist conceptsallow for inter temporal and inter spatial comparisons, because we hold the constituent partsconstant. Only with conceptually grounded and empirically confirmed measurements we canvisualize major trends such as neoliberalism or a major shift to market embracing preferences ofpolitical actors such as parties.

4 The most illustrative example of such an approach are of course the radical versions of constructivism – here meaning varies for every individual.

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2. The Changing Meaning of the Market

The market as a bound space was a known phenomenon in ancient times already and passedthrough a remarkable etymological history.5 Thinkers early attached a specific behaviour to marketactors – and so did for example Aristotle in Topics where he discussed the questions of means andends within market processes (Finley 1970) which was taken up in the Marxian analysis in the 19 th

century again (Marx 1971 [1867]). Without a considerable change in semantics, the denotation ofmarkets became transcendent to a broader concept of the general coordination of people. Themarket as a social institution entails much more assumptions about its mechanisms, the attributes ofmarket participants, the underlying prerequisites and the resulting outcomes in comparison to amarket as a single place – the market received a second meaning, which Jameson described as an“image of society” (Jameson 1991, 263).

This conceptual enrichment took mainly place in the period of the Scottish Enlightenment(Slater & Tonkiss 2001, 14; Braudel 1992).6 Scottish Enlightenment scholars perceived markettransactions close to their utilitarian ideal and rendered the market exchange an appreciablebehaviour in general. This stipulated a certain contrast to the Christian tradition of sceptic to pureeconomic orientations and self-interest and, of course, to the mechanisms of the feudal order. Manycounter reactions to the approval of market forces were based on notions of solidarity and thesceptic that competition fuelled with self-interest can foster the common good (Perry et al., 2006, p.540). The debate in the 19th century about these issues structured the ideological position of theemerging political parties and their conception of the role of markets (Lipset & Rokkan 1967). ForLipset and Rokkan is was straight forward to order the political parties on an economic dimensionas a response, first, in territorial terms, to the nationalisation processes and, second, in terms of theeconomic strata triggered by the industrial revolution. The industrial revolution introduced themeaning of markets in the daily calculus of many people which so far had mainly lived outside thelogic of markets (Polanyi 1973).

Workers became seen as a group with homogeneous interests and consequently treated as aforce to mobilize against the reign of free markets. Communist, Socialists and to a certain extendChristian Democrats saw their electoral base overexposed to the free play of markets and argued todifferent degrees for strong controls or specific interventions. In the tradition of the ScottishEnlightenment, liberals developed another perspective on markets. For liberals, markets are not anatural law like institution, but an appreciable social order, which needs continuous intervention toreveal its welfare increasing effects (Foucault 2008). In contrast, conservatives emphasized thepower of unhampered markets. The temporal economic disorders are in the Malthusian tradition anelement of catharsis – disruptions are seen as the results of ineffective trials to circumvent the lawsof market in the periods before. The emerging party families of the 19th century, so far, can be easilyranked in their degree of market liberalism.In the 20th century, political parties started to shape the importance of market mechanisms withinthe democratized societies. After the first large-scale experiment of market liberalism in the early20th century, where the economic most potential societies increasingly supported free marketpolitics, the discourse changed with the great depression and an overwhelming number of leadingscholars at that time argued to observe the ubiquitous retreat of market forces (Höpner 2011). Evenif the market sceptic remained in the post war decades, the restoration of market liberalism becamea new ideological foundation with the ideas of the Austrian school in the 1930's. For those scholarsmarket liberalism became an inescapable requirement, because the market became seen to be themost efficient information processing mechanism – the only way to cope with the complexity of5 Compare for an etymological history of the term market Norman Davis (1952).6 We even find evidence long before the 18th century that people abstract from spatially bounded market transaction to ageneral principle of market exchange as an image of society (Davis 2012).

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modern societies (Mises 1981; Hayek 1945; 1991). In the early post war era the reservation aboutunfettered markets continued. Markets remained constrained in an environment of internationalrestrictions and provided national governments with leeway to develop their particularities in therelation of state and markets. This inspired Ruggie to the famous term - “embedded liberalism”(Ruggie 1982). Not until the “embedded liberals” experienced their crisis in the 1970s, the ideas ofthe Austrian scholars gained momentum and many societies joined in a process, which we callneoliberalism today (Harvey 2005).

3. Context Sensitivity of Market Liberalism

Whereas the narrative of neoliberalism implicitly assume that we share a common understanding ofmarket liberalism. We can even explore if market liberalism mean different things in differentplaces and times. For example, Nicolas Jabko argues, the single European Market was onlypossible, because every head of a specific member state had its own concept of the EuropeanMarket in mind. This vagueness of the concept circumvented the otherwise irreconcilabledifferences in the interests of the member states towards the Single European Market (Jabko 2006).7

In principal, the subjectivity of meaning could lead to the analysis of individual perceptionsof market liberalism. Party experts are individuals and often their assessment of party positions isseen as a benchmark to validity in the literature on party positions. I will demonstrate that this is agood choice as far as we are interested in country specific perceptions of party positions. There areexpert’s surveys, which capture the placement of political parties between market liberal and moreinterventionist positions (Baker et al. 2012; Rohrschneider & Whitefield 2012; Benoit & Laver2006). For example, the Chapel Hill Survey (Bakker et al. 2012) asks experts to localize politicalparties on an 11-point-scale on market regulation (compare table 1).

Table 1: Expert Placement of Market Regulation

Question: Next, we would like you to consider where political parties stood on the following policy dimensions in [country] in 2010.On each dimension, we ask you to assess the position of the party leadership, and then to assess the importance/salience of this dimension for a party's public stance.

… Position on deregulation.(0) strongly opposes deregulation of markets (10) strongly support deregulation of markets

Average Standard deviation (by party) 1.52

Average range (by party) 5.2

Number of experts 640

Number of parties 237

Average observation per party 8.9

Source: Individual expert assessment from the Chapel Hill Trend File 1999-2010 (Bakker et al. 2012).

The concept is “market regulation” and we can for a moment assume that preferences forunregulated markets is closed to what people would even perceive as market liberal. However, theconcept is not precisely introduced and even the unit of analysis is not entirely specified as thequestionnaire named the “leadership” of a party to be the entity of concern. There remainsconsiderable leeway for experts to interpret market regulation, what the party leadership consists of,7 There are many other proponents of the context sensitivity in the meaning of markets (compare O'Neill 1998, 7-16 for a profound discussion of essentialism and markets).

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which information to base the assessment on and how to combine this information into a pointestimate. Unsurprisingly, the point estimates by single experts have considerable variation. Theaverage standard deviation for single parties in the survey is 1.6 and the average range (5.2) coversalmost half of the entire scale. Usually, the individual point estimates are not of great concern andresearchers refer to the average point estimates for single parties. In case of the Chapel Hill Survey,these estimates are on average based on 8.9 experts. As far as expert placements are developedunder the context of national party system, we can even assess systematic differences in theperception of market regulation over countries.

Party programs are seen by experts to be the most important link between parties’ideological preferences and the electorate (Rohrschneider & Whitefield 2012).8 We can assume thatthe role of manifestos for the localisation of political parties is even more important for experts.Programmatic proposals entail various policy aims of political parties and thereby signal the readernot only concrete issues but as well underlying latent concepts. We can test how manifesto signalsinfluence the placement of political parties by experts. I demonstrate this with a multi-levelregression using saliency scores of manifesto data as independent variable9 and a merged expertsurvey data set as depended variable.10,11

8 Experts were asked to rank the importance of different ways parties build ties to their electorate, from a 1 to 7 scalethe average of party manifestos is 4.7 and higher than every other category. The second highest are charismatic leaders(4.5) (own calculation).9 The independent variables (relative emphasis of issue categories within electoral proposals) are slightly transformed.Issue categories are recalculated as relative emphasis of all economic issues and logarithmised to capture theassumptions of marginal decreasing importance of repeated notions (Loewe et al. 2011).10 The Benoit and Laver Survey (2006) entails a dimension of deregulation: „Favours high levels of state regulation andcontrol of the market (1) Favours deregulation of markets at every opportunity (20)“ (coverage: 47 countries in 2003-2004). Different waves of the Chapel Hill Survey (2012) entails as well a dimension of market regulation: „Stronglyopposes deregulation of markets (0) strongly supports deregulation of markets (10)“ (coverage: 24 countries in 1999,2002, 2006, and 2010). There is as well an item which asks for the general ideological position on the economicdimension. Both items correlate with 0.97 and last one entails examples of concrete policy implications which made mefavouring the other one with direct mentioning of markets. Finally, I used the Rohrschneider and Whitefield Survey(2012) providing a state vs. market dimension: „ Against markets (1) or pro markets (7) (coverage: 27 countries in 2007and 2008). All items are inverted if necessary and standardized on a 0-1 scale before merged. In 2002 the Benoit-Laverand the Chapel Hill Survey overlap and I could not reject to a 99%-level the null hypothesis of significant differencesusing a two-sided t-test of the point estimates.11 Expert estimates are used for the following countries: Sweden, Norway, Denmark, Finland, Iceland, Belgium,Netherlands, France, Italy, Spain, Greece, Portugal, Germany, Austria, Switzerland, Great Britain, Ireland, UnitedStates, Canada, Australia, New Zealand, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland,Romania, Slovakia, Slovenia.

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Leonce Röth Political Parties and Market Liberalism Table 2: Explaining Experts Placements on Market Liberalism with Manifesto Issue Emphasis

DV Model 1Expert

Placement(2001-2008)

Model:Baseline

(single level)

Model 2 Expert

Placement(2001-2008)

Model:1

(second level:parfam)

Model 3Expert

Placement(2001-2008)

Model:2

(second level:year)

Model 4Expert

Placement(2001-2008)

Model:3

(secondlevel:

country)

IV's12 Coefficient(standardized)

Coefficient(standardized)

Coefficient(standardized)

Coefficient(standardized)

CMPCode

Description

Free Enterprises 1.18*** 0.93*** 1.18*** 1.11*** per401 Favourable mentions of free enterprise capitalism; superiority of individual enterprise overstate and control systems; favourable mentions of private property rights, personalenterprise and initiative; need for unhampered individual enterprises.

EconomicOrthodoxy

0.45** 0.34* 0.44** 0.46** per414 Need for traditional economic orthodoxy, e.g. reduction of budget deficits, retrenchment incrisis, thrift and savings; support for traditional economic institutions such as stock marketand banking system; support for strong currency.

EducationLimitation

0.18 0.01 0.19 0.21* per507 Limiting expenditure on education; otherwise as 506 (education expansion), but negative.

AdministrativeEfficiency

0.05 0.06 0.05 0.08** per303 Need for efficiency and economy in government and administration; cutting down civilservice; improving governmental procedures; general appeal to make the process ofgovernment and administration cheaper and more effective.

EconomicPlanning

0.03 0.22 -0.03 -0.01 per404 Favourable mentions of long-standing economic planning of a consultative or indicativenature need for government to create such a plan.

continued

12 Major restrictions are included in the model. I used data with proper party manifestos as a data base only (progtype==1) and excluded estimated issues and as well as scores withlow values for inter coder reliability (testresult<=0.4; see for related concerns Kostas Geminis 2013).

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Leonce Röth Political Parties and Market Liberalism

continued

Welfare State Expansion

-0.06 -0.01 -0.06 -0.20** per504 Favourable mentions of need to introduce maintain or expand any social service or socialsecurity scheme; support for social services such as health service or social housing. Note:This category excludes education.

EnvironmentalProtection*

-0.21** -0.09 -0.20** -0.20** per501 Preservation of countryside, forests, etc.; general preservation of natural resources against selfish interests; proper use of national parks; soil banks, etc.; environmental improvement.

Marxist Analysis -0.23 -0.21 -0.23 -0.17 per415 Positive references (typically but not necessary by communist parties) to the specific use of Marxist-Leninist terminology and analysis of situations which are otherwise uncodable.

DemandManagement

-0.36 -0.44 -0.37 -0.39 per409 Demand-oriented economic policy; economic policy devoted to the reduction ofdepressions and/or to increase private demand through increasing public demand and/orthrough increasing social expenditures.

Regulation -0.44** -0.18 -0.44*** -0.46*** per403 Need for regulations designed to make private enterprises work better; actions againstmonopolies and trusts, and in defence of consumer and small business; encouragingeconomic competition; social market economy.

Social Justice -0.23* -0.01 -0.23** -0.28** per503 Concept of equality; need for fair treatment of all people; special protection forunderprivileged; need for fair distribution of resources; removal of class barriers; end ofdiscrimination such as racial or sexual discrimination, etc.

ControlledEconomy

-1.17*** -1.01*** -1.17*** -1.24*** per412 General need for direct government control of economy; control over prices, wages, rents,etc.; state intervention into the economic system.

Nationalization -2.23*** -1.32*** -2.23*** -2.33*** per413 Favourable mentions of government ownership.

Random-effectsparameters

Residual:sd(_cons) 0.22

Parfam:sd(_cons) 0.09

Year:sd(_cons) 0.00

Country:sd(_cons) 0.03

X² 212.76*** 70.13*** 120.12*** 3.76

N 710 710 710 710

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Leonce Röth Political Parties an Market LiberalismThe algebraic signs of the coefficients mainly follow what we would have assumed to be signals ofmarket liberalism or signals of a more controlled economy. Some issues have systematic impactover the whole sample of observations. For example the favourable mention of governmentownership (nationalisation) or direct government control (controlled economy) is negatively relatedto expert’s placements on a market liberalism scale (significant to a 99% level). On the contrary,emphasis on unhampered individual enterprises (free enterprise) or austerity in public spending(economic orthodoxy) is positively related to experts' placement on the market regulation scale.

However, I am not interested in the systematic relationships at this point, but in the contextsensitivity of the findings. If we allow intercepts and coefficients to vary over different levels wecan significantly improve our model fit (X²). Allowing party families to have their specificcomposition of issues is a quite striking improvement (Model 2=X²=70.13 < Model 2=X²=212.76).Allowing varying relations in different years improves the model as well (Model 3=X²=120.12 <Model 1=X²=212.76). Finally, allowing country specific findings leads to a model, which almostentirely explain the Variance in the dependent variable (Model 4=X²=3.76 < Model 1=X²=212.76).This findings support the expectations, that expert assessments can be well explained byprogrammatic emphasis; however, this relationship is context sensitive.

Table 3: Panel Regressions on Expert Party Positions on Market Regulation

DV Expert Survey

Expert Survey

CountriesIv’s

66 For every single country

Administrative efficiency

0.02 + (and significant in 100% of the individual country regressions)

Free enterprise 0.23*** + (100%)

Regulation -0.03 + (54%)

Planned economy 0.01 - (100%)

Demand management 0.04 - (62%)

Controlled economy -0.16*** - (100%)

Nationalization -0.31*** - (100%)

Economic orthodoxy 0.05 + (86%)

Marxist analysis -0.09 - (15%)

Environmental protection

-0.07* - (73%)

Social justice -0.04 - (92%)

Welfare expansion -0.04 - (96%)

Labour positive -0.04 - (32%)

R²average R²

0.24-

-0.93

n 710 41 (country regressions)

Notes:***=p< 0.01;**= p< 0.05;*=p< 0.10. + = positive coefficient - = negative coefficient

The context which matters most is the country. This is not really surprising; experts are asked toconsider the placement of parties in relation to their national counterparts. Even if the issuecomposition seems to be relatively stable in the context of market liberalism,13 we cannot expect theplacements to be comparable in terms of their levels. A Market liberal party with an average expertplacement of 6 in Sweden is probably much less market liberal than a party with a 6 in the United

13 This is probably not the case for higher aggregated dimensions such as left and right, where the issue compositionvaries considerably over countries.

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Leonce Röth Political Parties an Market LiberalismStates. This means the average point-estimates of experts are hardly comparable in cross nationalterms. Table 3 supports that view. A panel regression over 66 countries with the same manifestoissue categories as independent variables explain only 24 percent of the overall variance (comparetable 3).

Regressions on the within country level, however, can explain on average 93 percent14 of theparty differences. To conclude, party placements by experts are a good subject to study the contextsensitive perception of terminologically fixed concepts. However, the restricted cross countryreference leads to the problem of differential item functioning. Not only terminological fixedconcepts such as market regulation can be filled with highly varying content over countries, even ifconcepts are understood in highly similar terms, the levels of placement could be unrelated to theconcept at hand. The conductors of expert surveys start to use “vignettes” to anchor the expertplacements (Bakker et al. 2012). Other scholars start to use bridging observations to adjust thelevels for cross country observations (Koenig et al. 2013).

To analyse the issue structure of party manifestos inductively via regressions or principalcomponent analysis is to account for all the variance and covariance of a set of items.15 Therebyresearches focussing on systematic differences, which allows distinguishing political parties. Thiscomes close to the subjective process of experts, which try to differentiate parties via signalleddifferences. Constant commonalities are cancelled out, by both the regression and to a lesser extentby factor analytical approaches. Consequently, the more context sensitivity in terms of space andtime we apply to our measures of distinguishing political parties the closer we come to thesubjective assessment of experts.

Table 4: Country Specific Latent and Factor Analytical Measurements

Note: sem (structrual equation modelling coefficients); pca (principal component factors). Correlation of sem and pca =0.97.

However, as far as we are still concerned with party positions, we should think of the relationship ofparty manifestos and party positions. Whereas emphasis in manifestos could be causally related tothe perceptions of expert placements; issue emphasis of political parties in electoral proposals is notformative for the party position but reflective. The appropriate statistical procedure to capture thisrelationship is to focus on the covariance, which different categories of emphasized issues have incommon (Acock 2013, 3).16 Structural equation modelling is the appropriate statistical approach to14 This average excludes Belgium. Belgium has a very poor fit and this is due to the separate party systems in Walloniaand Flanders. The model is not able to separate the position of socialist in Flanders and socialists in Wallonia forexample.15 Avery good discussion on why this is highly problematic for the inductive identification of dimensions or the scaledevelopment for latent constructs is provided by Costello and Osborne (2005). Compare also (Fabrigar et al. 1999).16 Beyond the advantages of focussing on the shared covariance, reflective measurement procedures such as structuralequation modelling abstract from assumptions such as unique error variance in regression or factor analytical

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Sweden Czech Republik Germany Spainsem pca sem pca sem pca sem pca

401 free enterprise 0.87 0.41 0.66 0.4 0.63 0.38 0.91 0.43414 economic orthodoxy 0.56 0.39 0.56 0.27 0.59 0.37 0.67 0.34402 incentives 0.74 0.29 0.29 0.07 0.19 0.13 0.57 0.34505 less welfare spending0.28 0.19 0.78 0.38 0.4 0.25 0.75 0.37303 administrative efficiency0.39 0.23 0.43 0.29 0.43 0.28 0.4 0.22416 Anti-Growth 0.00 . -0.21 0.02 -0.2 -0.17 -0.19 -0.13403 regulation -0.50 -0.32 -0.12 0.02 0.24 0.14 -0.17 -0.04504 more welfare spending-0.30 -0.19 -0.36 -0.19 -0.26 -0.16 -0.16 -0.08415 marxist Analysis -0.14 -0.12 -0.16 -0.26 -0.5 -0.29 -0.31 -0.26404 planned economy -0.24 -0.2 -0.17 -0.22 -0.2 -0.16 0.14 0.02503 social justice -0.36 -0.23 -0.34 -0.24 -0.4 -0.24 -0.41 -0.22501 Environmental Protection-0.46 -0.25 -0.48 -0.34 -0.51 -0.32 -0.75 -0.39412 controlled economy -0.62 -0.31 -0.20 -0.33 -0.56 -0.35 -0.42 -0.24413 nationalization -0.54 -0.32 -0.38 -0.33 -0.43 -0.29 -0.31 -0.23

Leonce Röth Political Parties an Market Liberalismreproduce a latent party position reflected by indicators like emphasis in manifesto programs. Tocapture the country specific meaning of manifesto signals for the dimension of market liberalism Icalculate structural equation models for every country separately. Table 4 entails the results for fourcountries.

The country's specific results reveal some interesting findings. Apart from a few exceptions(grey emphasized in the table), almost every issue have the same relationship to an underlyingdimension of market liberalism. And even if it seems conventional wisdom to favour structuralequation based models (sem) on principal component analysis (pca) (Fabrigar et al. 1999; Costelloand Osborne 2005), the correlation of sem based and pca based coefficients/factors is very high(0.97). Coefficients as well as factor loadings indicate the importance of indicators for the latentdimension. I will discuss the meaning of sem coefficients in more detail in the last part. At thispoint, the cross country variation is of more importance. Regulation is negatively related to marketliberalism in three out of the four countries. However, in Germany it is positively related to marketliberalism.17 Even more confusing is the finding that planned economy is slightly positive related tomarket liberalism in Spain and a clear-cut interventionist issue in most of the other countries. Oftenissues have very low coefficients in countries because they are basically never mentioned. Lowcoefficients can be explained out of missing data as well. Nobody would deny that Marxism shouldbe a stronger indicator for market scepticism than regulation, but this is not reflected in the data,because Marxism was used as a residual category by coders in many countries and in somecountries not at all. In Eastern European countries parties seldom emphasises nationalization,because of the political heritage of communism. As a consequence factor loadings or coefficientsare low, even if nobody would deny theoretically, that nationalisation is a very good indicator formarket sceptic positions.

If we would analyse the issue composition of market liberalism in specific countries atcertain points in time we could picture the discourse of market liberalism even more precise. Casestudies would be much more suitable for this approach, because we would necessarily diminish thedegrees of freedom for statistical analysis.

We can still analyse the overall temporal development of certain categories independent ofcountry particularities. I run several structural equation models in different time periods toexemplify how certain policy proposals in party manifestos represent the underlying preferencetowards market liberalism in that specific period.18 Most of the economic issues can be seen asdistinct in terms of their relation to be an indicator of being market liberal or interventionist(compare figure 2). Figure 2 shows the coefficients of market liberalism to the respective manifestoissue. For example in the period from 1980 to 1990 the coefficient of free enterprise is 0.69 andsignificant to the 99% level.19 An increase in one standard deviation on the market liberalism scalewould on average increase the emphasis of free enterprise by 0.69 standard deviations.

Still thinking in the paradigm of context sensitivity, we are, however, not mainly interestedin the specific communication of market liberalism via electoral programs, but one the changingimportance of certain issue reflecting market liberalism over time. Even if we can attribute most ofthe issues to be an indicator of being market liberal or interventionist, some indicators show aremarkable change in their relation to market liberalism. For example environmental protection canbe seen as unimportant for the distinction of being market liberal until the mid-1960's.

approaches and thereby reducing a lot of noise and miss-specified relations (Acock 2013, 3).17 This finding is already discussed in Franzmann & Kaiser (2006). Regulation is not a „left owned“ issue in Germany. Iwould add, regulation is an ambiguous issue in general. 18 The manifesto data are transformed on a yearly basis to make periods independent of election dates. The structuralequation models are run with maximum likelihood estimators as well as adjusted distribution free estimators. Partyfrequency weights are applied and the test with robust standard country errors does not influence the significance levels.The model is calculated for every period separately and the model fit is mainly far away from conventional standards.This is mainly due to the absence of necessary adjustments concerning correlated error terms which I left out forreasons of parsimony. Some indicators have a substantial amount of missing – especially Marxist analysis – andmaximum likelihood including missing would be appropriate, because we probably underestimate the meaning ofMarxism significantly.19 Every coefficient with a substantial loading is significant to the 99% level, but there is as well exception. For anoverview of the significance levels compare appendix a.

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Leonce Röth Political Parties and Market Liberalism

Figure 2: Substance of Manifesto Indicators for Latent Concept of Market Liberalism

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Leonce Röth Political Parties and Market Liberalism

A related issue, the critic of the growth paradigm (anti-growth), only turned out to be controversialon the market dimension in the late 1970's. We can interpret environmental protection as a marketsceptic issue, because the need to emphasis public intervention in to the realm of the environmentpresupposes the analysis that unfettered markets results in ecological devastation. To be againsteconomic growth in general means to resign the welfare increasing effects associated to markets.Planned economy interestingly lost its relationship to market liberalism. A closer look at partymanifesto reveals, that planned economy is increasingly mentioned by a broad spectrum of parties.They usually refer to the overall plan of technological developments or long-term educational aimsto match expected demand on the labour market or international competitiveness. Other indicatorsare constantly strong signals of market liberalism. For example, the strong notion of thenationalization of industries or the positive reference to a Marxian analysis unsurprisingly indicatesa certain distance to a market liberal stance. On the other side, austerity (economic orthodoxy) orincentives have appeal to parties with rather market liberal positions.

Comparing the electoral communication strategies of market liberalism in different timeperiods is to account for another random time context only. We could go one and increase thecontext sensitivity of meaning and exert profound discourse analysis.20 However, as long as we donot have an essentialist concept as a benchmark, we cannot even say something about theplausibility of certain findings. If we calculate party positions with different formula’s for differentcountries and time periods researchers converge to a constructivist approach of denotationalvariance – such as the super issue approach of left and right.

These measurements should not confuse subjective perceptions with the measurement ofpositions (Mair & Bartolini 1990, 7). If market liberalism is composed of different policy positionsin Czech Republic than in Germany, if the meaning of market liberalism is very different in the1960's in comparison to 1990's, point estimates are hardly comparable. Context sensitiveapproaches should discuss internal validity only as credibility and external validity as applicabilityor transferability (Guba & Lincoln 1985). Simon Franzmann demonstrated that party strategies turninto a competition over issue, broader ideological dimensions are restricted to be consistentlytransferred geographically. What voters and parties identify of being left or right shows enormousvariation (Franzmann 2009; De Vries et al. 2013). For example, the relation of the cultural andeconomic sub dimensions of left and right seem to be inverted for many Eastern European countries(Rovny & Edwards 2012). That means a very market liberal party with strong notion onauthoritarian values would be very left in the east and moderate in the west if we would force thesefindings into positions.

The preceding part of the paper, however, leads to the first cautious conclusion thatdifferences in the meaning of market liberalism are much less pronounced than the findings of leftand right perceptions indicated. That means boring news for the constructivist analysis of marketliberalism and may be confirms the attempts of Michael Foucault or Fredrick Jameson to perceivemarket liberalism as a conceptual constant in post modernity. What is boring news for theconstructivist approach is good news for its positivist counterpart. Conceptual stability meansvalidity in terms of transferability which can be translated as a potential for generalizability. Astransferability is the constructivist equivalent of external validity, credibility is the pendant tointernal validity. The positivist approach mainly measures internal validity as construct validity –construct validity, however, is only appropriate if we have an essentially grounded concept as abenchmark. This argument can be seen as a connection of often confrontational research traditions.Evidence of context sensitive approaches can be used as a reliability criteria in positivist research.

Empirically, the discussion of denotational variation of market liberalism indicates mixedevidence for the competing interpretations of the policy space. There is no evidence for the end ofideologies (Bell 1960). Political issues still cluster systematically towards simplified policysolutions on a higher level. Additionally, Huber & Inglehart (1995) or Flanagan & Lee (2003) are

20 There are very good studies on the changing meaning and communication of market liberalism in the tradition of discourse analysis. for Sweden see Kristina Boréus (1994).

12

Leonce Röth Political Parties and Market Liberalismprobably right in seeing for example environmental protection as unrelated to the economicdimension in the 1960s. But afterwards environmental protection turned out to be a paradigm forthe embedding hypothesis (Kriesi et al. 2006). Today, the notion of environmental protection is avery good indicator for market sceptic preferences of political parties. Nonetheless, other issues dis-confirm the embedding hypothesis. Especially, regulation or economic planning seemed to havebecome ambiguous signals in terms of market liberalism. Overall the issue composition of themarket dimension seems to support James Stimsons perception of the “tides of consent” (2004).Issues enter and leave the cognitive interpretation as being solved by the free market or tide statecontrol. Consequently, the market dimension is not a black hole, but only bears a strong andgrowing cognitive gravity.21 However, context sensitivity comes with a methodological weakness.The rather inductive nature of such an approach easily ignores commonalities. A typical finding ofdiscours analysis for example states that demand management – the Keynesian paradigm – was aconsensus issues in various countries until the late 1970s. Afterwards the same issue experienced afar-reaching refusal. But the renunciation towards public demand management and the appearanceof the monetarists is mainly seen as a symbol of the market liberal turn in the 1980s – however, in avery context sensitive procedure this broader picture vanishes. Statistically it never served as adiscriminatory signal and consequently failed to explain country or time specific variance.

However, the overall conclusion of the first part is twofold: first, the proof of denotationalstability can serve as a source of reliability to any deductive measurement; second, positions ofmoving targets remain hard to compare – as Heisenberg demonstrated. As far as we wantcomparable positions of political actors on whatever dimension we need to follow a deductiveapproach with profound concept formation. The preceding analysis, however, can be seen as anencouraging proof, that the market dimension renders a far lower variance in meaning as otherconflict dimensions, such as left and right or its post-material or cultural sub-dimensions. The taskof the remaining parts of the paper is to calculate comparable party positions towards the market.

4. The Deductive Approach – Identifying Properties of Market Liberalism

“Before we can rank objects or measure them in terms of some variable, we must form the conceptof that variable” (Lazarsfeld & Barton 1951, 155). A good concept has to fulfil a set of criteria to behelpful to researchers. Following the criteria of Gerring (1999). I argue market liberalism is afamiliar term, it triggers a denotational resonance and it provides theoretical as well as field utility. Iwill discuss the remaining criteria in broader detail, because they are not comparably obvious. FirstI will lay out what I understand as market liberalism and refer to its conceptual depth. I will argue,that the prerequisites, necessary and sufficient conditions of market liberalism build a parsimoniousand coherent set of properties. After the mapping of party positions towards the market, I willillustrate the differentiation potential of my measure of market liberalism with a discussion ofconstruct and convergent validity.

Hence, what is the concept of market liberalism? The functioning of markets relies on theacceptance of certain rules which is usually referred to as the legal framework. This frameworkentails two basic ingredients: the acceptance of far reaching negative rights of freedom and theacceptance of individual property rights (Carruthers & Ariovich, 2004, p. 30).22 So far, individualscan set out exchange of legally owned things. However, legal exchange as such does not constitutea market. Inherited from the market as a bound place, the market always refers to a concentration ofsellers and buyers. This concentration allows the comparative assessment of offers and demandsand leads to the actor constellation of competition under the assumption of scarcity (Simmel, 1964

21 There are some studies which document the the cognitive gravity of the conventional policy dimensions in emergingdemocracies (e.g. Marks et al. 2006; Vachudova & Hooghe 2009). 22 Macpherson provides a very good overview of the duality of negative freedom rights and property rights in historicalperspective (Underkuffler 2003). This legal framework is the essence of constitutional liberalism – advocates of aliberal market order that Walter Eucken and the Freiburg School developed and which is implied in the constitutionalpolitical economy, founded on the work of James Buchanan (Vanberg 1999, 6).

13

Leonce Röth Political Parties and Market Liberalism[1922]). Competition ensures a specific matching of supply and demand and drives the supply sideto efficiency and innovation. The mentioned properties are reflected in the definition of PatrickAspers: “A market is a social structure for the exchange of rights in which offers are evaluated andpriced, and compete with one another, which is shorthand for the fact that actors – individuals and[corporate actors] – compete with one another via offers” (Aspers, 2011, p. 4).

So far, the market has four necessary conditions: negative rights of freedom, individualproperty rights, a concentration of supply and demand and scarcity. Given, all necessary conditionsare present, we expect the market to fulfil at least two functions: Innovation and efficiency. Themechanism which relates conditions and envisaged functions is competition. The advantages ofsuch a simple coordination principle are obvious. Innovation broadens the overall supply andincrease the match of desires from the demand side and the variety of offers. Efficiency reducesscarcity and increase the overall capacities of supply. The impact of markets should be an overallincrease in the freedom of choice (Friedmann & Friedmann 1980) and an increase in the overallamount of welfare (Smith, 1991 [1776], p. 264).

In the tradition of Emile Durkheim, Karl Polanyi and the Frankfurt School variousintellectuals highlighted the social foundations of the legal framework which ensures marketsproper functioning. And additionally, the markets functioning is not only reliant on various forms ofsocial trust, the function of markets is mediated by various contexts of social embeddedness(Polanyi 1944; Granovetter & Swedberg 2001). However, if we focus deductively on the dialecticalinterplay of social embeddeness and the free play of markets we end up like Karl Marx in astructuralist position reflecting on the laws of market capitalism. I, however, focus on politicalparties which hold certain positions towards the market irrespective of their ability to consistentlydefend their favourite type of social coordination.

Even if we completely identify ourselves with the mechanisms of markets it is self-evidentthat innovation and efficiency is not endlessly combinable with other normative standards such asequality, solidarity or broader collective orientations in general. Actors capacities to exert theirfreedom within markets follow a simple weighting scheme. On the demand side, desires areweighted by purchasing power and on the supply side by market share. Purchasing power is not themain problem of the historically bourgeois supporters of the market mechanism, it is rather theconcentration of supply. What Marx and Engels tried to scientifically proof as the laws ofaccumulation was for many liberals the reason to approve a certain degree of regulation to ensurethe beneficial constellation of competition.

Within the camp of the strongest advocates of this coordination principle we observe afundamental disagreement about the self sustaining properties of this wealth generating mechanism.A member of the Swedish parliament formulated it as follows: “if we think of the difference in theconception of market liberalism between our conservative and the liberal party, conservatives thinkthat the market is the state of nature. Liberals think that they can establish and regulate the marketorder and thereby constantly overestimate the capacity of humans to change the state of nature”(Röth 2013). The first minor objection to the unhampered laws of the markets came from itsstrongest supporters – the liberals.23

On the demand side, the daily interaction on markets disadvantages those, who are restrictedin purchasing power. Beyond the mobilization of the poor, there are however, infinite other ways totreat specific groups of people with favour by specific market interventions or the public overtakingof allocation and distribution. Market intervention is seen as a necessary correction of unintendedoutcomes by market forces on the one hand (Polanyi 1944) and as an attempts of rent seekingambitions at the same time (Hayek 1991).

When we see the market as a liberating force especially to those who can afford their libertyit is not surprising that the moral justification of markets early tended to gravitate around theconsequentialist moral philosophy – the promise of the common good by selfishness (Fourcade &Healy 2007). The market sceptics early based their caveat against the market on a deontologicalfoundation – the notion of collective orientations which encourage emphatic and solidarity norms(Röth 2012; Hirschmann 1997). Early socialist usually guided by Christian morals, conservative23 Compare also Vanberg for a helpful discussion of regulation for constitutional liberalism (Vanberg 2006).

14

Leonce Röth Political Parties and Market Liberalismcommunitarians, romantic traditionalist etc., all of them focused on the fundamental difference ofinstrumental behavior and the proper orientation on the community. The critics of early socialistslike Saint-Simon, communists like Marx or many sociologists like Weber or Habermas share a basicplea – the necessity to adjust common aims, common values, or more abstract, common claims tovalidity. The market became the symbol of individuality and the state the symbol of collectivity.This makes market liberalism not only a very powerful ideology, its political application necessarilyshift burdens between individual and collective responsibilities and thereby alters the chances ofpeople within societies. Market liberalism became a salient dimension of political conflict withinthe democratic societies.24

As far as my concern is to map the positions of political parties towards market liberalismthe difference in complexity of market approval and market septic should be taken serious. Myapproach focus on the programmatic signaled position of political parties. Parties are of courseheterogeneous actors and even if we assume the party leadership to be unitary in their ideologicalpositions, programmatic position still can deviate from the position of key figures on top of theparty. My scope condition abstract from the difference of party leader- or “true” positions and focuson “programmatic signaled positions” only (Budge 2001). Signaled positions are not only closer topolicy implementation, signaled positions take the strategical considerations of intra-party dynamicsand between parties and voters serious. For example, the Swedish Moderate party could be termedvery market liberal when it comes to the ideological positions of its leaders. Their self-placement isa 7 on a 1-7 scale (Interview 2013). However, their programmatic position enormously changed inthe 2006 electoral campaign to a much more moderate position. The party leaders never changedtheir ideological conviction, they stated “the voters were not yet ready for the pace of marketreforms, so we adapted our policies to their preferences and slowed down the efforts on marketreforms” (Röth 2013).

Even if we consider the position towards market liberalism a very salient conflict dimensionthere are astonishingly few attempts to properly map political parties on a market dimension. Thosewho did proceeded mainly inductively and used factor analytical tools (e.g. Maier & Bartolini 1990;Carkoglu 1995). Factor analytical approaches are misleading for my purpose for two reasons: First,an essential approach to concepts is not exploratory when it comes to the relation of party signalsand the underlying concept, but confirmatory. Second, factor analytical approaches account for theoverall variance and covariance of a set of items, but I am rather interested in the portion ofcovariance that the indicators of a latent concept have in common. Therefore, we should think ofmarket liberalism as the independent variable, an ideological position which causes certain policyproposal, which serves us as reflections of a latent party positions. In other words emphasis oncertain envisaged policies in party manifesto reflect the underlying position of political partiestowards market liberalism. The proper statistical way to proof this relation is confirmatory andapplicable within structural equation modeling.

Factor analytical approaches usually search in an exploratory way for dimensions. Theconceptual interpretation comes after the identification of clustered observations. However, adeductive approach follows the opposite way. We should lie out which indicators we expect astheoretically appropriate and consistent to the definition of the concept. Consequently I select allprecoded issues from the manifesto dataset which could be theoretically related to the approval ofmarkets or on the other side the political intervention into market mechanisms. Before discussingthe selected items, I explain major transformation to the data.

CMP data are basically saliency scores, measured by the percentage of quasi sentences for acertain issue of the entire quasi sentences in the party program (Volkens et al. 2013). As far as weare concerned with a market dimension, I recalculate them as percentages of the overall economicissues in the manifesto. This is based on the assumption, that the latent position towards marketliberalism is mainly independent from statements in other policy areas such as the cultural or24 I constantly refer to the term „dimension“, which is different to the term „cleavage“. The concept of cleavage isrooted in the tradition of Parsons structural functionalism and has strong assumptions concerning social positions andpolitical preferences. A cleavage is conflict dimension with a specific distribution of voters on that conflict dimension,but conflict dimension is not necessarily a cleavage (Bartolini & Mair 1990).

15

Leonce Röth Political Parties and Market Liberalisminternational dimension. Otherwise, the results would have been strongly biased by the ratio ofsaliency given to the economic dimension in general. Additionally, I apply a logarithmictransformation to the data, because I assume the marginal reflective value of an indicator todecrease. For example some party manifestos entail only emphasis on free enterprises withoutmentioning any other of the economic categories. It seems not convincing that a linear relationshipbetween emphasis and party position is justifiable here (see also Loewe et al. 2013; Koenig 2013).Table 5 provides an overview of the issue categories after the transformation of percentages ofemphasis in the economic dimension. The mean values indicate the average percentage of quasisentences over the whole data set.

Table 5: Overview of IndicatorsVariable Expected Relation Obs Mean Std. Dev. Min Max

to Market Liberalism

(a) Economic Policy(1) Free enterprise (401) + 9812 4.8 8.1 0 100(2) Incentives (402) + 9812 5.0 6.3 0 100(8) Administrative efficiency (303) + 9812 6.6 9.1 0 100(9) Economic orthodoxy (414) + 9812 5.1 8.8 0 100(3) Regulation (403) ? 9812 4.1 5.2 0 66.7(4) Demand management (409) - 9812 0.6 2.0 0 42.1(5) Economic planning (404) - 9812 2.0 5.1 0 98.3(6) Controlled economy (412) - 9812 1.7 4.0 0 100(7) Nationalisation (413) - 9812 0.9 2.0 0 55.3(8) Marxist analysis (415) - 5812 0.2 2.3 0 70.5

(b) Welfare State Policies(1) Less welfare Spending (505) + 9812 0.9 2.8 0 90(2) Less education spending (507) + 9812 0.1 1.0 0 30(3) Welfare state expansion (504) - 9812 14.5 15.3 0 100(4) Social justice (503) - 9812 9.0 9.4 0 100

(d) Environment(1) Environmental protection (501) - 9813 6.0 10.1 0 95.8(2) Anti-Growth (416) - 6711 0.8 2.8 0 37.8

Note: The Manifesto Data are transformed into monthly data, this is way the number of observations are that high.

The market dimension can be divided into sub-dimensions. There is an economic policy dimensionwere political parties reveal their general preferences of governments to interfere in the free play ofmarkets. The first four issues are all expected to be positively related to market liberalism. Higheremphasis on free enterprises should be explained by higher trust in market mechanisms in general.Economic incentives are usually proposed when we generally favour market mechanisms, butacknowledge the need for minor adjustment and avoiding harder regulation at the same time. Thiscategory correspond to the liberal conception of market liberalism.25 Administrative Efficiencycaptures the notion of efficiency in public facilities which basically demand for market mechanismsin the public administration. Economic orthodoxy captures the budgetary preferences of politicalparties and could be interpreted as the austerity category.26 Tight budgets, however, are usuallymentioned to avoid increased spending on other policy fields. More market liberal parties shouldsignificantly shed more emphasis on free enterprises, economic orthodoxy, administrative efficiencyand incentives.

Regulation entails the explicit notion of the need for more competition via anti-trust policies.

25 This holds especially true, because the conception of the manifesto group directly refer to the need for morecompetition within this category. In principal regulation could be even stressed by more market sceptic actors, if wethink of the French Regulation School for example.26 The category entails as well every emphasis on planned bail outs of banks, which is conceptually completelymisleading here. However, I assume, that the bail out of banks is not a very often stresses issues in party manifestos ingeneral.

16

Leonce Röth Political Parties and Market LiberalismSo we can expect, that this category is highly used by market embracing liberals, but at the sametime by rather market sceptic parties which stress the need for general intervention. Consequently, Ikeep it as an open hypothesis if the indicator of regulation is positively or negatively related tomarket liberalism. The indicators 4-7 all represent policy ambitions which are rather market hostile.Especially, nationalisation of business or general emphasis of control should reflect rather marketrejecting positions of political parties.

The welfare state dimension could be even seen as an independent political conflictdimension. However, the main theories of welfare states explain welfare as a necessarycompensation to market exposure. This is reflected in the compensation literature which highlightscompensation in welfare risks due to international market exposure (Katzenstein 1985) or in thepower resource approach, which shed light on the domestic processes of unequal exposure tomarkets. In this narrative welfare systems became established through the mobilization of peoplewith higher labour market risks (Korpi & Palme 1998, Esping-Andersen 1989). Therefore, Iinterpret the demand for a stronger welfare state as a general unease with the social outcomes ofmarkets.

Finally, I argue to treat environmental protection not exclusively as a policy issue of postmaterialism (Inglehardt 1984). For Karl Polanyi, not only labour was to a certain degree a fictitiouscommodity which cannot be subject to market mechanisms alone; Polanyi argued that land is afictitious commodity as well which cannot be sustainably maintained by free markets. The emphasisof environmental protection embodies a deep sceptic of market mechanisms. This is even strongerin the notion of anti-growth, where the main benefit of market processes is rejected.

I calculated several structural equation models with the 14 indicators and market liberalismas the latent variable (compare results in figure 3).27 The model converges after 6 iterations and 32observations were dropped because of missing data. The calculation is based on 9812 remainingobservations. Every coefficient of the indicators is significant to a 99% level independent of themodel specification (compare footnote 22). The direction of the algebraic signs correspond to thetheoretical expectations. The interpretation of the coefficients (values beside the arrows) is similarto beta weights. For example if a party is one standard deviation higher on a market liberalismscale, the party will have on average 0.65 standard deviation more emphasis on the freedom ofenterprises category in their manifesto.

Figure 3: Latent Measurement Model of Market Liberalism

27The reported model uses maximum likelihood estimation. The yearly transformation of the data made me includeparty frequency weights. I tested as well asymptotic free distribution estimation, because of the right skewed dependedvariables, However neither adf-estimation nor robust standard errors (I tested bootstrapped standard errors as well asclustered standard errors by party family, country or Western and Eastern Europe) changed the coefficients substantiallyor alters their significance levels. I excluded manifesto observations which are based on estimates (progtype !=3 ) forreasons of reliability (see also Geminis 2012).

17

Market_Liberalism

1Incentives

1.4ε 1 .91

Welfare Expansion2.6

ε 2.94

Social Justice1.9

ε 3 .88

Less Welfare.46

ε 4 .86

Marxist Analysis.16

ε 5 .98

Economic Orthodoxy1.1

ε 6.76

Nationalisation.46

ε 7 .83

Controlled Economy.64

ε 8 .91

Environmental Protection.88

ε 9 .84

Economic Planning.7

ε 10 .97

Regulation1.3

ε 11.98

Free Enterprise1.1

ε 12.58

Administrative Efficiency1.4

ε 13.95

Anti Growth.37

ε 14 .97

.3

-.24

-.35

.38

-.13

.18

.49-.41

-.29

.12

-.4

.23

-.17

-.14

.65

.22

-.16

Goodness of fitX² (33) = 809.95***

p <0.001RMSEA = 0.046

CFI = 0.89SRMR = 0.03

N = 9813p reliability = 0.68

Leonce Röth Political Parties and Market LiberalismThe error terms of Marxist analysis and economic planning as well free enterprise and economicorthodoxy are related. This has minor impact on the overall model fit as well as on the coefficientsof the indicators. As the literature suggest significantly related error terms should be adjusted in thatway, only if this is theoretically plausible. Manifestos are coded by hand and some categories areclosely related. For example Marxist analysis and economic planning are probably oftencomplementary categories, where coders are not sure to which category the quasi sentencesbelongs. Especially in those case we can expect systematic covariation between error terms.

The one factor model cannot reproduce the entire covariance matrix of the indicators as thesignificant X² value of 809.95 indicates. However, the CFI reports the improvement in comparisonto unrelated indicators. Under consideration of the data quality 89% is a very good value.28 RMSEvalues below 0.46 indicates a very good model fit as well, taken the complexity of the model underconsideration.

All coefficients have the algebraic sign which were expected from the theoretical discussion.Regulation has a negative sign and is negative related to market liberalism. The size of thecoefficients can be read as the importance of the party position on market liberalism for theemphasis of certain issue categories in the respective manifesto. It seems very plausible that moremarket liberal parties highlight the freedom of entrepreneurship to a higher degree than marketsceptical parties. The same hold true for the nationalisation of industries which is confirmed to be avery strong indicator of market liberalism. With two major exception the coefficients reflect thetheoretical expectations. Anti-growth and Marxist analysis have lower coefficients than expected.This can partly be explained by the very high amount of missings which both indicators have incommon.

As a first test of face validity figure 4 pictures the average market liberalism scores perannum and party family. Conservative parties have the highest trust in the unhampered play ofmarkets, liberal parties are slightly less market liberal, Christian democrats have considerable moreinterventionist positions, social democrats constantly moved to more market liberal positions butstill remain significantly less market embracing than their bourgeois competitors. Green parties aremainly market sceptic even if they move to more market advocating positions these days, andcommunist are the most market sceptical parties on average.

28 Dependent on the data source values higher 0.90 or 0.95 are common (Hu & Bentler 1999).18

Leonce Röth Political Parties and Market LiberalismFigure 4: Average Positions of Party Families on Market Liberalism

Note: For the yearly average positions party values are transformed on a yearly basis to avoid selection effects. The index of market liberalism is linear transformed into a 0-1 scale with 1 indicating very market liberal. Note, that the panel is not entirely balanced, changes can be due to country effects. For example Eastern European countries join the calculation since the 1990's.

4. 1 Convergent Validity

Convergent validity refers to the comparison of measures against measure that are also measures ofthe same concept. Martin Elff calculated a latent state-space model based on CMP data. He selectedseven issue categories which are all also part of my market liberalism model (2013). Latent modelshave the advantage, that they account for the difference in importance of indicators to theunderlying party position. Nonetheless, Elffs conception of market liberalism is much narrower andentails only indicators which I would classify as economic policy issues, abstracting from welfareand environmental issues. Much more important, Ellf allows for varying issue compositions overcountries and use a smoothing procedure with Baysian posteriors. The correlation between myindex ans the scores of Elff is 0.76 (compare table 6). Because Elff uses amongst others theSwedish party system to demonstrate face validity, I discuss the Swedish in the following section inbroader detail (Elff 2013, 227).

Bartolini and Mair measured an economic dimension based on CMP data as well (1990).They selected 13 issues, including even the international dimension with categories suchprotectionism. Just as Martin Elff, the issue selection is not discussed at all. Bartolinis and Mairsweighting scheme is based on factor analysis and the importance of the single issues is comparableto my coefficients and to those of Elff. The overall correlation of market liberalism is slightly lower

19

0.2

.4.6

.81

1940 1960 1980 2000 2020

ecologists communists

socialdemocrates liberals

christian democrates conservatives

Leonce Röth Political Parties and Market Liberalismthan the correlation to the position scores of Martin Elff (0.75, compare table 6).29

The CMP data come with predefined programmatic dimensions as well. Beyond theconventional measure of left and right, Laver and Budge differentiate between a dimension ofeconomic planning (Planeco), a market dimension (Markeco) and a welfare dimension (welfare)(Laver & Budge 1992). The identification of these issues was based on pca. The markeco measureof Laver and Budge entails free enterprise and economic orthodoxy, both indicators have the highestcoefficients in my structural equation model as well. Because market liberalism includes the Laverand Budge market as well as welfare and planning issues I subtracted planeco and welfare from themarkeco index. The correlation of the Laver and Budge position scores to the index of marketliberalism is 0.75.

While explaining the fortunes of extreme right parties, Spies & Franzmann (2011) measuredan economic dimension based on the procedure of Franzmann & Kaiser (2006). This measurementis mainly based on the differentiation of confrontational and consensus issues. Only confrontationalissues are considered by constructing party positions. Issues beeing confrontational or consensual isdecided by the authors on a country basis. Thereby, they use in my terminology a context sensitivemeasure. The meaning of positions can vary over countries, but not over time. The issuecomposition of that measurement uses every economically related issue and is consequently muchbroader than my measurement. Additionally, environmental protection seen to belong to the culturaldimension. Nonetheless, the correlation to my measurement is 0.76.

The correlation to the merged expert surveys is only 0.68. However, due to the discussion inthe part about context sensitivity, I do not think that expert survey are necessarily a good benchmarkfor validity for cross country and inter-temporal comparisons. Finally, I reproduced the Vanillaapproach of Gabel and Huber (2000) for the market dimension only. The resulting scores which arebased on country specific pca correlate only with 0.43 to the index of market liberalism. However,convergent validity is the more important the closer the underlying concepts are to each other. Evenif all of them measure something like a market dimension, they have considerable differences whichI discuss in the next part of construct validity.

Table 6: Convergent Validity

Elff(2013)

Bartolini & Mair(1990)

Markeco-Planeco-Welfare(Laber & Budge

1992)

Franzmann &Kaiser 2006

ExpertSurveys

(Bakker et al.2012)

Vanilla(Gabel & Huber 2000)

MarketLiberalism

(Röth 2013)

0.76 0.75 0.73 0.71 0.68 (0.71)0.43 (country specific)

4.2. Construct Validity

I discuss the construct validity of different approaches with the example of three Swedish parties.For the Swedish Moderata Samlingspartiet, the Swedish Socialdemokratiska Arbetareparti and theSwedish Folkpartiet Liberalerna I have party positions on the market dimension based on in-depthinterviews with party leaders. Compared to expert surveys I use average party positions based on 8Interviews per party. However, the placement of party leaders is based on an in-depth discussion ofthe underlying concept. Consequently, party members locate their party with a commonunderstanding of what concept they are talking about. I used the definition of market liberalismabove and referred markets as general mechanism of social coordination. Politicians were asked toonly consider domestic policies as the base of their placement. The average standard deviation is0.4 over the three parties on a 7 point scale. The Interviewees were asked to rank their party for

29I reproduced the scores of Bartolini and Mair for the entire period of available manifesto data.

20

Leonce Röth Political Parties and Market Liberalismevery period with different party leaders from 1970 onwards. Consequently, the measures are not asfine grained as measures based on every election and not completely focussed on programmaticsignalled positions. However, it gives a good picture of the self conception of Swedish parties interms of market liberalism. The positions are cross checked with assessment from the party leadersof other parties. At least the rank in terms of market liberalism was in 100% of the cases confirmed.

Table 7: Correlations of Competing Approaches with Self-Placement of Party Leaders

n=22 Politicians(Self

Placement)

Measure ofthis Paper

(t)

Mair &Bartolini

1990

Gabel &Huber 2000

Elff 2013 ExpertSurveys

Measure of this Paper

0.85(0.65)

-

Mair & Bartolini 1990

0.72 0.66(0.65)

-

Gabel & Huber 2000

0.57 0.39(0.42)

0.45 -

Elff 2013 0.36 0.76(0.69)

0.65 0.40 -

Expert Surveys

0.87 0.68(0.72)

0.45 0.20 0.32 -

Franzmann & Kaiser

0.83 0.76(0.71)

0.52 0.24 0.63 0.40

The correlation of the measure of this paper and the self-placement of politicians performs well(0.85). However, the differences does not say something about the quality of the approach, but ismainly due to slightly different conceptions of market liberalism reflected in the selection of issues.If we compare the party positions in figure 5 for the different approaches, we observe the biggestdifferences between parties in my approach. This is due to the wider conception of marketliberalism and a broader selection of issues. In general all approaches confirm a certain pattern,which Swedish party experts would probably agree with. Market Liberalism as a controversialdimension until the 1970s. From the 1970's onwards conservatives moderated their position slightlyand social democrats moved constantly to more market embracing positions. In the 2006 election,the conservatives and social democrats turned strongly back to more market sceptic positions.

The reproduced scores of Mair and Bartolini have the same pattern, but on a significantlyhigher level. Every party is considerably more market liberal. This is because, Mair and Bartoliniintegrated the international trade dimension and Sweden is known for being an open economyadvocating free trade. Despite the methodological concerns about the superiority of structuralequation models over factor analytical approaches, the differences are rather to be neglected in thiscase. The reproduced Vanilla-Approach of Gabel and Huber for the economic dimension onlymarginally differs from the latent variable approach.

By far the lowest similarity in terms of correlation to the self placement of politicians hasthe approach of Martin Elff. However, the differences here are probably explained out of thecombination of issue selection and the context sensitivity of his approach. The correlation of Elffsscores to the experts is considerably higher (0.76) than to the self placement of politicians (0.36).The comparison of party positions of Sweden illustrate that beyond the methodological progress inthe literature of measuring party positions, the results are still highly dependent on the conceptualfoundation of the measurement. The conceptual foundation should guide in the case of manifestodata the selection of issues and this selection is treated often very much as a poor relation. Myapproach reflects a very broad conception of market liberalism and consequently we can mainlysubsume approaches which focus on the economic policy, welfare or international trade dimension

21

Leonce Röth Political Parties and Market Liberalisminto a broader conception of market liberalism. However, the definition of dimensions and subdimensions is theoretical determined by conceptual reflections and should be applied consistentlywith statistical methods. Sophisticated statistical approaches and ever increasing accounts of contextsensitivity seem to make it necessary to repeat the warnings of Sartori: “the more we advancetechnically, the more we leave a vast, uncharted territory behind our backs” (cited from Gerring &Collier 2009, 13).

Figure 5: Market Liberalism, Swedish Mainstream Parties and Competing Approaches

Note: Own calculations and reproductions of the different approaches.

22

.2.4

.6.8

1M

arke

t Lib

eral

ism

1950 1960 1970 1980 1990 2000 2010

Social Democrats LiberalsConservatives

0.2

.4.6

.81

Mar

ket L

ibera

lism

(Elff

2013

)

1950 1960 1970 1980 1990 2000 2010

Social Democrats LiberalsConservatives

0.2

.4.6

.81

Mar

ket L

iber

alism

(Mair

& B

arto

lini 2

013)

1950 1960 1970 1980 1990 2000 2010

Social Democrats LiberalsConservatives

0.2

.4.6

.81

Mar

ket L

iber

alism

(Gab

el &

HUb

er 2

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1950 1960 1970 1980 1990 2000 2010

Social Democrats Liberals

Conservatives

Leonce Röth Political Parties and Market Liberalism5. Conclusion

Those who are supposed to operate with broad historical narratives assign market liberalism to be apowerful ideology. An ideology which necessarily divides political actors because its applicationcauses shifts in Georg Simmels timeless balance between individual freedom and collectiveresponsibilities. In democracies political parties should be the major agents whose interventions ornon-interventions mainly set the conditions under which action in markets is more or less rewarded.The mapping of political parties between the free reign of the market forces, over cautiousregulation, various forms of intervention, tight control to the domination of markets by thecommanding heights of the communist regimes, seems a useful endeavour.

However, it is not given at all that market liberalism means the same thing in differenttemporal and geographical circumstances. Therefore, I analysed the variance in meaning of marketliberalism for parties in space and time. Obviously, market liberalism has much higher conceptualtransferability than the collected evidence for left and right measure seems to suggest. The first partof this paper allows for this conclusion. The analysis of policy issues and market liberalism over thelast decades illustrates, that the relation of certain issues to the market dimension varies over time.But the issues rather loose ambiguity and a clear structure of the issue composition on the marketdimension seems to emerge. Emphasis on free enterprises or notions of nationalisation clearlydivide parties between market embracing or market sceptic positions. Environmental protectionenters the market dimension in the 1970's and can be seen as evidence for absorptive power of themarket ideology (see also Kriesi et al. 2006). This seems contradictory to many notions ofenvironmental protection being a core issue of post materialism (Inglehardt 1984). However, bothcan be true.

The market dimension should be seen as one of n-potential policy dimensions. It is first andforemost an ideological simplification in a proper Downsian sense (Downs 1957, 44-45). In thisinterpretation, policy actors can either decide to solve a political issue via market solutions orspecific public interventions – the same way as policy actors have to decide on the culturaldimension to intervene in the conduct of life of its citizens or not. These dimensions simplify thecomplexity of the political space in a sense of abstract policy solutions. In contrast, Post-materialism is based on the attitudes of voters. Governments cannot solve issues materially or post-materially, this distinction makes only sense in terms of the representational strains which underliesthe cleavage approach. Consequently, environmental protection can be associated to post-materialists and sceptics of the market. The market dimensions, to be clear about that, is not acleavage or a “bleached version” of the class struggle (Kapferer cited from Carrier 1997, 6).

Both interpretations confuse the mobilization of socio-economic characteristics with anideology of how to treat issues from the political supply side. As we know from the discourse in theScottish Enlightenment, the market dimension is older than the class struggle even if the position onboth conflict lines usually correspond.

Methodologically, it is difficult to trace positions of moving objects and consequently weshould be very careful to speak of comparable party positions in environments where conceptualtransferability is not given. When transferability of meaning is to a certain degree proofed, we cantake this as an indicator for high reliability in the sense of equivalence. At the same time, we shouldbe careful to employ measures of validity which only make sense in the deductive approach toconcepts. In this case, expert surveys proved not to be a good choice for measuring constructvalidity in a cross country perspective.

The best basis for construct validity is a good concept. Context-sensitive approaches toconcepts do not provide us with consistent set of properties where we can base our validity on.Therefore, only a deductive approach allows claims to construct validity and allows for thederivation of comparable positions. These positions are approximations of distances to ideal types,which can be defined only theoretically.

Following the theory, the market is the only form of social coordination which constantlychallenges the reign in the name of the public – whether to protect citizens from the failures ofmarkets (Polanyi 1944) or to seek rents for the own fellows (Hayek 1991). This duality spans a

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Leonce Röth Political Parties and Market Liberalismcontinuum where political actors necessarily have to position themselves and signal the voter whichsolution he can expect. The inevitableness of taking a stand gives the market dimension itsrelentless gravity – sooner or later issues will be discussed on whether they are handled with stateinterference or left through the market place alone. In comparative research, party positions towardsthe market which embody a sufficient temporal and geographical stability in denotion are anecessary progress. They especially shorten the causal chain to policies which are related to theeconomic sphere of politics and avoid the limitations associated to conventional left and rightmeasures.

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